SumTotal Likely to be Acquired by Private Equity Firm
Today was a very important day in the world of corporate learning and talent management systems.
Vista Equity Partners, a mid-sized private equity firm, announced a proposal to acquire SumTotal Systems, the largest independent provider of LMS software, and one of the pioneers in this industry.
Typically such transitions occur because the shareholders have lost faith in management and believe the company can be restructured or merged to create higher value. (Press release available here.)
This announcement reflects many of the rapid trends taking place in this market, making it even more important for buyers to understand the history and financial strength of their technology providers. The trends which are causing these changes include:
- The increased demand for a consolidated HR systems platform which manage enterprise learning, talent management, and other HR functions. We believe that today integration is more valuable than functionality in the majority of companies.
- The tremendous demand for collaborative and social learning platforms, which are slowly replacing formal learning and even traditional e-learning platforms, forcing LMS vendors to redefine their offerings. Many companies today are building their own YouTube-like learning systems which provide social, collaborative learning, often without the need for an LMS.
- The tremendous growth in SaaS (Software as a Service) solutions for mid-market companies, making it difficult for licensed software vendors to transition into the mid-market segment.
- Price pressure on LMS and talent management software providers, driven largely by unprofitable companies which are willing to discount below their own cost of delivery.
We have been working closely with SumTotal for many years and have followed the company through its early days as Docent, through its merger with Click2Learn and rebranding, its acquisition of Pathlore and Mindsolve, and its transition into a SaaS business model. If this buyout goes through it will likely mean a replacement of the board of dirctors and some of its management team, making this the most significant chapter in the company’s history to date.
Next week at IMPACT2009 we will be tackling the challenges and issues in this market head-on in our vendor panels on the future of learning and talent platforms and press event: LMS and Learning Platforms: The Pivot Point. In addition to hearing our latest findings about this market, attendees will have the unique opportunity to discuss the market’s future with senior executives from all the leading solution providers.
In this rapidly changing time, I encourage you to join us – or set up a time to talk with one of our analysts about what these changes mean for your organization.
<Note – This news has changed as of April 24. Please read this post for the updated news.>